HSBC Global Research lowered its target price for Dah Sing Banking Group (DSBG)(02356) to HK$12 from HK$22.1 and maintained its "buy" rating.
The research house cut its 2019/20 earnings estimates on DSBG by 25.2%/39.4% primarily on the back of more conservative estimates on loans and assets growth, NIM, fee income and credit costs.
HSBC expects DSBG to remain conservative in asset growth, given possible SME asset quality deterioration; this leads the research house to a low/mid-single-digit loan growth forecasts. HSBC also expects funding costs to moderately increase on the back of deposit competition. Near term, HSBC expects 3Q NIM to be supported by a higher average HIBOR relative to 1H, but downside exists if USD and HKD interbank rates trend lower going in 2020 onwards.
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